SOMSA Release : A Race to Save Vital UK Remittance Lifeline
(Medeshi)- The Horn of African communities face the prospect of losing millions in remittance finance following news that Barclays is to withdraw banking services from up to 250 of Money Service Businesses (MSBs) UK.
Barclays recently informed three-quarters of the money-service companies that use its accounts that it no longer wanted their custom – and gave them a very short notice to find alternative banking facilities by 10 July 2013. Barclays is the last UK bank that has been providing services to the Somali MSBs.
The Somali Money Services Association (SOMSA), a UK trade body for the money transfer industry, which has 17 members, has confirmed that 12 of its members have already lost their accounts with major banks in the UK, including Barclays and HSBC. Five others face imminent bank account closures.
The key issue is the damage to flows of cash to the vulnerable Somali people, who depend on remittances for their livelihood; and the likely threat of this action to economic and political stability in fragile parts of the Somali region.
This action will have dire consequences in Somalia, where no alternatives to the money service businesses exist. The bank’s decision to close the accounts of licensed and regulated Somali MSBs could have the unintended consequence that money transfer might be pushed underground into the hands of unlicensed, unregulated and illegal providers.
The action of the banks will affect the many in the UK who send money back home, as well as those who receive it. It will also affect the international aid organizations, which have no choice other than to use the licensed providers.
Financial institutions, including banks and MSBs, have understandable concerns about money laundering. Its worth mentioning that the Somali MSBs play a key role in the fight against money laundering and work closely with all law enforcement agencies in the UK, including HMRC, FCA, SOCA and other relevant authorities.
Undoubtedly, this action of the banks will deny the availability and accessibility of the service to millions of clients, in the Horn of Africa, including an unbanked majority
The Somali MSB industry is ready to work with the banks, regulators and policy makers to resolve this matter.
SOMSA and its members, which are deeply concerned about the negative impact that the bank’s action will have on its valued clients, regret to share the gravity of this problem with all stakeholders, including the clients and respectably seek their support in resolving this matter. We request our valued clients to join us in our appeal to the banks and the UK government authorities to reconsider this decision and find a fair and durable solution to this unfolding humanitarian crisis.